Less than 25 New Companies to Mine Uranium by 2011
Companies / Uranium Apr 23, 2007 - 06:27 PM GMTBy: James_Finch
Nearly 500 companies are posing as 'uranium mining companies' worldwide. Hundreds of those publicly traded uranium companies will never mine a single pound of uranium. Along with the crash-and-burn of those companies, many investors could lose all or a large part of their speculative investment. How can one really find out which companies have an honest shot at becoming uranium miners?
Odds favor the eventual disintegration of hundreds of uranium mining juniors over the next few years. More than 500 companies now claim to be exploring for uranium, developing one or more uranium projects or producing uranium. As 2010 approaches, 90 percent of those companies will have changed their name and/or moved onto something new. Investors are vulnerable to the subsequent stock rollbacks in those highly speculative issues, which could result in the entire loss of their investment.
After three years of research, we've watched the entire sector jump by twenty-fold from a few dozen uranium companies to the present number. As many as four hundred companies were never really serious about becoming uranium producers. They were simply trying to ‘raise money' and capitalize upon the hottest commodity sector. Our intensive six-month research investigation found less than 25 of the new uranium companies likely to mine any uranium before 2011.
Many of those near-term producers are being rewarded by high market capitalizations, but many of the junior exploration companies remain at very high risk. In Chapter Three of our new publication, Uranium Outlook 2007-2008, we explained the difference between choosing a uranium stock today and tomorrow versus a year ago. In 2005 and 2006, choosing nearly any uranium stock was a dart throw away from hitting the bull's eye. Now that the market has begun maturing, investors must become more selective in their decisions.
The next two years will likely to witness a massive consolidation within the uranium space. Only those companies which have moved their projects forward are poised to survive the eventual ‘downdraft' in the uranium price. Earlier this year, we forecast high volatility in the uranium price. The spot uranium price has soared, but the amount of actual uranium material trading hands continues being delivered at much lower prices. We also forecast a price hiccup, probably as early as this summer. Investors must question whether some of the marginal exploration companies remain safe, even for momentum trading.
Other questions investors must ask themselves include:
Which major mines are vulnerable to lowered mining output between 2007 and 2011? We found at least three uranium producers which may have difficulties with their current mining operations and explained why in Chapter One of Uranium Outlook: 2007-2008.
How can an investor minimize his risks when studying which uranium companies offer the most safety in the years ahead? Is it possible to separate the hyperbole from the reality of a company's project(s)? We wrote the old rules, and now there's a new set of rules to follow.
When will uranium prices peak and reach equilibrium between supply and demand?
What are the most major obstacles preventing the near-term uranium producers from transforming their uranium projects into operating mines?
Is it worth betting on the Australian mining companies? There is a triple-whammy ahead for more than 100 Australian uranium exploration companies. Nearly everyone is focusing on the Labor Policy change.
This doesn't mean investing in uranium mining stocks hasn't reached fever pitch yet. The mania is on, but not over yet. When will it end? We have three price peaks – from high to low and in between – citing where and when the uranium price would likely peak and where it would fall to. Every bull market climbs a wall of worry and uranium is no different.
By James Finch
http://www.stockinterview.com
COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS RESERVED
James Finch contributes to StockInterview.com and other publications. His focus on the uranium mining and nuclear fuel sector resulted in the widely popular “Investing in the Great Uranium Bull Market,” which is now available on and on http://www.amazon.com The weekly spot uranium price is posted on the TradeTech website every weekend at http://www.uranium.info
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